Retention is the key to successful marketing: why marketers should pay more attention to churn

Gen Furukawa

|

Founder

of

Retainable

Gen Furukawa

Episode Summary

Today on Churn.fm, we have Gen Furukawa, founder of Retainable and former VP of Marketing at Jungle Scout.

In this episode, Gen shared how he previously dealt with churn and retention as the VP of Marketing at Jungle Scout, and how it affected the marketing metrics his team needed to track.

We also talked about how to get buy-in and convince the leadership team to focus on reducing churn, who should own customer churn and retention within a company, and Gen's advice for a startup struggling with churn.

As usual, I'm excited to hear what you think of this episode, and if you have any feedback, I would love to hear from you. You can email me directly on Andrew@churn.fm. Don't forget to follow us on Twitter.

Transcription

Andrew MichaelHey Gen, welcome to the show.

Gen FurukawaThanks so much, Andrew. Excited to be here.

Andrew MichaelIt's great to have you on the show. For the listeners. Ken is the founder of Retainable, and attainable helps b2b companies reduce churn top generate more revenue by recovering failed payments driving reactivations and converting upsell opportunities. Prior to attainable Gen was the VP of Marketing at Jungle Scout and Jungle Scout build software and have a community for Amazon sellers. He was the first marketing hire the lead the growth of the company to over 100,000 customers. So my first question for you is you spend The last eight plus years helping Amazon sellers. What made you make the switch to focus on b2b companies to reduce churn?

Gen FurukawaYeah, sure. So it's actually about four years at Jungle Scout. And it was really, it was an interesting play because Jungle Scout is a software to help Amazon sellers. But it is, of course, software as a service. So I was leading the marketing team was responsible for awareness and acquisition. And I was part of the founding team. So was the first marketing hire air from the very start, when I joined, it was just a Chrome extension. So it was a one time purchase. And at that point, that's when you know, like driving acquisition is really primary because you buy your extension for lifetime you own it forever. So retention is not a problem. Soon after, though, we we did launch the SAS product. So that's when we introduced the challenge of churn for Jungle Scout. So Jungle Scout is an Amazon product research tool. It helps people find products to sell on Amazon. The Shaolin So very similar to what a dating app might be is, once you help a person find a product to sell on Amazon, then they no longer necessarily need it until they're ready for their next product. So that's kind of where churn became a challenge. We help people succeed find their product, and then they could either pause or cancel and then come back. So it It wasn't still is the best tool on the market in terms of helping Amazon sellers. But churn was a challenge. And so I saw that it was a challenge that a lot of companies a lot of SAS companies face, but there really is no definitive solution or the resources out there to solve the problem are not really as prevalent as I was hoping. So I saw an opportunity to help other SAS companies in the same way that we tried to tackle the challenge at Jungle Scout.

Andrew MichaelVery interesting. I think there's a lot to unpack in that and we can dive into on the topic for The show, and sorry, my correction is what I saw through the LinkedIn by and then prior to Jungle Scout, you'd also worked in various other roles that had focused on Amazon sellers. So hence the mistake there. But you mentioned something very interesting and something I don't think we've had the opportunity to really dive into and chat much about on the podcast yet was the concept of a business who was working with a one time sale making the switch and transition to becoming a subscription business. Maybe you want to start off like talking us through a little bit like what were the motivations behind it? What are the steps that the company put in place to make that search?

Gen FurukawaYeah, sure. So Greg is Greg Mercer is a founder, CEO of Jungle Scout, very savvy entrepreneur and always forward thinking an extent he built the extension basically as a proof of concept as an Amazon seller. So he was an Amazon seller was looking for a data driven way to find awkward product opportunities. So it's not always the most popular product on Amazon that's going to make you a successful seller. But it's finding these like odd lucrative niches. So for example, one of the case studies that we ran when I was there was called the million dollar case that we're launching products to sell on Amazon. The product we ended up selling was bamboo marshmallow sticks, I think they've gross almost like $800,000 or something since they've launched. But it's it's those type of products, that Jungle Scout helps surface. And the extension is great. But again, you're not going to be able to get the recurring revenue from an existing customer once you acquire them. So that was really the premise behind taking the extension and then kind of morphing it. So it ultimately addresses the same problem, but from a different a different lens. So that's where the SAS product came about. And what was really great is at jungle scale, we were so forthright with content content marketing was really the the growth engine And once we had an installed user base for the Chrome extension, that was a fantastic initial group to sell the SAS product to.

Andrew MichaelYeah, I was gonna say as well, that sounds very similar to what you're saying now, when like a case like Zillow, for example, and you mentioned dating apps previously that if a company It sounds like you're only going to buy a house really once every 10 1520 years, whatever is so the lows of products, not something you're doing every day. And typically what they went to did was find alternate use cases and like in the form of content, so whether it be getting a valuation on your house, like using Zillow, to keep up to speed and seeing what the valuation of your houses or consuming content there so that when you do come around again to wanting to buy a house and like in your case, wanting to find a new product. You come to Zillow for that,

Gen Furukawatotally, I checked zestimate all the time. Now I'm checking for schools, the school rating so that's a great analogy.

Andrew MichaelSo how did you then start to think about like, what were some of the services or things that you could layer on? That would be more of a recurring use case? For the business?

Gen FurukawaBefore for Jungle Scout? Yes, yeah. So Jungle Scout was the SAS product, we called it, the web app was basically a database of all of the Amazon products on all the products on Amazon. So there were a bunch of different metrics that we captured. So it was monthly sales it both in units and in revenue, number of reviews, number of the rating of five stars. And so basically, a user would go to the product database, say I want to look at a product that's in these categories. So they could filter for those categories within this price range with this net margin, and then it would spit spit out what the products that fit in there are. So there were millions of products that were catalog. So on an ongoing basis, your the marketplace is so dynamic and things are changing all the time that you really want, you know, a snapshot in time, but at different points in time. So the other feature that was really helpful, which we call the product tracker would track the sales over time. So you don't just want to see all right, there's, you know, pool floats are selling really well in July, like, let's go sell pool floats. And then you get it in December, and it's selling nothing. So you want to know what the sales trajectory is over time. And so that's where the recurring element came in. Because we'd have the product tracker where you'd be able to get some insight on what were the price fluctuations, what were the sales, and then that would also inform what your competitors were doing, as they were also competing, you know, Amazon's a very competitive marketplace, the search algorithm, and the paid ads now, so you really want to get a good idea of what the holistic landscape is, before you make an intro. Because he's in order to get into the Amazon, Amazon game, it might, you know, be thousand dollars 2000 depends on what your initial inventory by is. But you want to make that make a really data driven decision. So that's where we would have users who would sign up, find a couple products that they thought would be good, and then track them over time. So that that's why we had the recurring revenue. And that's why it made sense for users to sign up for the SAS product.

Andrew MichaelYeah, and that does make a lot of sense as well, like be able to source these trends specifically in like a category and identify opportunities or maybe before they've even become like a big opportunity, which is cool. Exactly,

Andrew MichaelYou are then on the marketing team and you lead a big part of the growth here in the early days. Obviously, like marketing itself has a big impact when it comes to churn and retention. How was it seemed like what was the responsibility of marketing when it came to retention at jungle scouts, like How did you view acquisition?

Gen FurukawaYeah, sure. So I was responsible for the awareness and acquisition. So basically like, top of funnel, and it was low touch high volume business. So we didn't have a sales team, all customers came through the marketing efforts. So for a while the marketing team and I was responsible for what retention was. But it became clearly apparent that as this was scaling out, it was no longer enough just to have a support team, but a customer success team was actually also an imperative. So at that point, that the retention metric and the onboarding kind of shifted over to Yes. But ultimately, and I think you preach this as well on your podcast, it is a it is a team effort. So you know, no one person per se can be wholly responsible for what retention is or churn at the end of the month because there are so many elements between The product team, the marketing devs, CES, both sex, Customer Success and Support. So for a while it did sit on marketing. But we did transition it as our team grew and we had greater bandwidth to address critical points in, in our onboarding.

Andrew MichaelAbsolutely. And then, so when it came to that those Well, in the early days when we're sitting within the marketing, how did this influence the metrics that you attract and the targets that you said, so in terms of things like focusing on conversion rates and ensuring sort of like CAC, like, how did retention influence those metrics when you were going about the different awareness initiatives?

Gen FurukawaYeah, that's a really good question. You know, and to be Frank, Frank, we didn't necessarily have the data at the at the time to inform those decisions. Because maybe where you're going with this is like, all right, we know what the LTV is based on channel. And so you know, Facebook sellers might have a shorter lifetime value, or a lower lifetime value than an organic acquisition. So we had a sense of what it might be and where, what channels were best and brought in the best users. But we weren't necessarily able to tie down LTV to channel. However, with that said, we were able to, to do something which was perhaps more important, which was to segment what type of seller what type of user, we were getting in the onboarding phase. So that's relevant for in this use case, because an Amazon seller, you know, it could be a new seller or it could be somebody who has an eight figure business and is constantly looking to expand their brand line. So, you know, more skews always the necessary path in order to succeed as an Amazon seller. So are they are they looking to kind of like optimize and grow and find more products or are they more of a newbie look Going to get their first product up and not sure how to navigate these potential pitfalls. So that would really inform what the onboarding was. And then so in that way, we're able to hone in and get the right message, the right customer at the right time, to impact retention positively.

Andrew MichaelAnd very interesting. When you mentioned as well, sort of the channel aspect, I think personal personal opinion, I think depends on the volume, it's always going to be very difficult to understand sort of, like the impact of LTV and the impact of specific game campaigns and LTV and retention. But I think what is interesting, and you touched on parts of it, as well as really being able to identify who your ideal customer is, and then being able to figure out, are you acquiring enough of those ideal customers, because in the end of the day, if you're finding people that are sticking around with you longer and spending more, you want to be trying to find more of those in your marketing initiatives and be able to measure that I think is powerful.

Unknown SpeakerExactly. Right.

Andrew MichaelCool. So moving a little bit forward then and we'll probably come back to Jungle Scout in a bit. But currently now you're at returnable, and maybe you want to talk us through a little bit about what you do how you help companies. What is your methodology and process?

Gen FurukawaYeah, sure. So yeah, I started with tenable because I saw firsthand how powerful lever that retention is for growing a SAS business. But I felt that there were a lot of companies that were struggling to understand what you're saying, who would be churning and when they would be turning and why. So I thought that if I could provide this to other SAS companies, then now that would be an unfair advantage, because with retention, just even small, incremental improvements have outsized impacts when you consider even just on a monthly recurring revenue basis, or what the impact is on the customer lifetime, over time, and that compound as a company grows, and that's the beauty of SAS is the recurring nature of it. So I did see an opportunity That in terms of how SAS companies were growing, there was a heavy emphasis on acquisition and even in some ways, monetization, but retention seemed like an area where there was an unnecessary lack of focus or a need. So, yeah, I started retailable. To help b2b SAS companies reduce churn. And so how we do that really is focusing on kind of like an expanse of customer communication, product analytics and onboarding strategy, and then customer segmentation. So our ultimate goal is that we can hone in on getting the right message in front of the right customer at the right time. So kind of encapsulates onboarding emails and upsell emails. And then as well as like different channels, whether it's in app messaging, or push notification, push notifications, or email as well.

Andrew MichaelI love it. This sort of realization came from a VP of Marketing. That retention was one of the biggest opportunities for growth because like you said, typically one of those areas that's an afterthought when it comes to growth. But really, when you understand the mechanics and the maths behind it, it really is the power, the most powerful lever you can do to influence growth.

Gen FurukawaYeah, and you're just like marketing these days. There's so many pillars within marketing. And I think retention is such an interesting problem. And it's hard to scale. There's no like one size fits all solution. I think that's the premise of your show. But it's just so fascinating to be in the depths of it with different companies in different challenges. Because whether it is a CS problem or marketing or product, but then there are elements of like email, email marketing, copywriting and analytics and and CRM or conversion rate optimization and all these things kind of like coming into influence what the likelihood is of customers staying or leaving and where their opportunities So I think like, with my experience with Jungle Scout and the customers that I'm working with now, customers over attainable, there's just so many layers to peel back to figure out where these improvements can be. And the the impact is, is really kind of heartening in some ways.

Andrew MichaelYeah. So I asked this question to everyone that joins the show. And I think it's a very, very valid one to you, because it's probably happens to you quite a lot. Let's pretend you're going to a new company. And churn and retention is not great. And you've been tasked now to try and turn things around. What would be some of the things that you would do in the first 90 days to actually see some results?

Gen FurukawaYeah, that's, I love that. You do ask that because that's a great question. And I think ultimately, you know, I, I think it's the worst thing to just come in with no preconceived idea of what it Isn't, you know, you come off maybe as a blowhard, and like, this is what you should do. So it's really about understanding where the problem is first. So, you know, is it with a product experience? And then that might inform looking into onboarding or support documentation or the Help Desk resources or people not using it? Or is it customer support or competitive alternatives? So that really is like, the first thing is solidifying what the reasons for churn are. And then so some companies do have this and have like, kind of the basic blocking and tackling down of what the onboarding flow is, and that would kind of inform, I'm sorry, off boarding. Like what the reasons for churn are kind of like proportionate to everybody who turns so that that's a great lens into knowing what the biggest problems are and where the gaps are. And then also, I speak with customers, this is both the high LTV what we will call like air quotes, the good customers, what do they love about the product and why are they staying and why They advocates. And then the recently turned, why did they turn so, of course there are like the multiple choice answers, but then also getting on the phone. And also having email exchanges really illuminates a lot about the qualitative part that brings to light what the numbers don't always do. So basically taking these reasons of shirt and then mapping them against what teams can address each problem and how. And then the next step is usually in onboarding. So it's generally like reviewing and improving onboarding just because that's where the biggest drop off is, in the first 30 to 60 days. So tools, there are cohort analysis. So where are users falling off and why? And I think chart mogul does a really great job in this and like, you can look at what the cohort analysis is. But then you can just kind of like layer in it. Of course, it depends on what data is being tracked. But what particular segments are showing good signs of retention where the retention curve is flattening out earlier? And who's dropping off faster? And so what are those things? Then I think looking further into onboarding, it's kind of like establishing a hypothesis of what the retention funnel is. So understanding what the key users are, what are the key actions for users to do to achieve that, you know, their first aha moment? Or what is it sometimes companies have conflicting views of it or might not know for sure. And then, yeah, I think just kind of accelerating that time to first value and then understanding what the the kind of key milestones are, and then where the drop off so it's very similar to what you might see as an acquisition funnel, but of course, it's just in reverse, you know, like, where we're drop off is and how can we address that?

Andrew MichaelOkay, interesting. Yeah, that's very like thorough process, I think then I think you started off as well. Three different areas in terms of research was really the more like, quantitative view of reasons for churn of people that have this historical view. The second point you mentioned was speaking to successful customers, which I really, really love. And I think, personally, it's the best place to start is really trying to understand what are those behaviors that successful companies and successful accounts are showing that you can try and replicate in others and see where the missing point is. And then the last one you mentioned was having jumping on the phone with people who have recently turned because as well i think that's super powerful then gives you this holistic view to identify which stage of the funnel you mentioned. So let's jump back as well then to the three months now and you've come out of this the end of its and one of the things I'm always interested in as well, especially coming from the outside is like execution? How do you start making things happen from this? And like one thing is definitely getting alignment and getting buy in. How do you do this? When you come into companies and you've done your initial research, you've understood what the problems are, what are your next steps when you work with him to sort of make sure that this is not just a study and then the lesson itself, but actually changes are made? And you can measure the impact?

Gen FurukawaYeah, no, that's a great question. And I think the challenge the alignment is established upfront, before we start a formal engagement, and the great thing, I think, is that there's absolutely alignment and there's little resistance because in some ways, and granted, I've been at this kind of like from an outside perspective for maybe six months. So that's a six month sample size. There's there's a real willingness to have a standardized approach to it. tension and kind of like a retention strategy and framework. And I think in many ways, what I see is that there's such focus, you know, as I said earlier on acquisition and growing new leads and new sales, that the retention is kind of like, trailed and in terms of what the priority is, until there's a certain inflection point of the company is this big. And retention is becoming more of a challenge and a pain, seeing X number of Fallout every month. So the resistance isn't necessarily a challenge. But you're totally right, that it requires an alignment. And I think that this is true, whether you're an outside party like I am, or if you're a team because even if it is fully handled internally, there needs to be alignment between customer success and marketing and product and Dev and support. So yeah, I think that the the real challenge is like, all right, can we Get this going and can we make the improvement as quickly as possible? Because there's there is like a framework that I bring to the table. And there's, there's the buy in there. And like, yeah, this totally makes sense. But in some ways in the same way that on the marketing side, there's a hypothesis and then you run, run the test. And not everything is necessarily going to result in an uplift in, you know, whatever it is that you're optimizing for. retention is the same way. There's not always going to be an improved onboarding experience the first time around. However, you know, of course, those failures can be lessons and then from there, that becomes informative for what the next test might be. So whether it's a test on the segmentation of who you're targeting, or what the messaging is, or what the channel is, there's there. I think the challenge might be to impart the willingness to test and balance that with the urgency to You see results and see positive results. So it's an interesting challenge, but from what I've seen, like, churn is such a big problem that there's like, you know, let's let's figure it out and let's go at it. So we both have both parties have a real sense of urgency to get this fixed.

Andrew MichaelYeah, and definitely, I think you mentioned like a few different things is that like that alignment is really really key because I quantum experimenting with one part of the product can actually have an impact on a completely different setting area and retention itself. It's not something typically you would see overnight changes and it's normally a collection of multiple changes that really drive the the figure up and turned down with it. So it's one maybe just having a little bit of patience, but I think in my thing is like it's really critical to have an alignment across the board. You can't have different teams focus on different objectives. So you can't have much Cutting, just trying to increase growth and just trying to bring in new leads by any means necessary really needs to be sort of, okay. The company's focus is we're trying to increase retention, we're trying to reduce churn. Every team on the company needs to be aligned with us and every team in the company needs to be experimenting and doing something to try and impact this.

Gen FurukawaExactly. I'd be curious to hear your your thoughts and some of the feedback you've heard from your guests then, in terms of where, where the owner lies. And because it's so multifaceted and goes across teams, it seems most logical that it's, you know, ultimately, it's a company in a team and maybe on an individual level might be the CEO. Yeah, which I think makes sense. But what do you think there?

Andrew MichaelYeah, so I mean, there's pretty much it varies a little bit, but I'd say the vast majority of companies end up sitting in customer success being responsible for it. It might change during the course of the like the growth nearly It might be the whole companies responsible, but then ultimately ends up living with customer success and most parts. My personal opinion is like this should always just be the number one goal of any SAS business. Like, it should just be the North Star that everybody's always focused on. Because that way that each different team can still own certain parts and certain aspects of it. But having the whole team constantly just thinking about this being the biggest growth lever you can pull in your company, it's the reason why companies are alive and it's the reason why companies die. So having a just as like we're a SAS, business and retention is the number one thing I think that sort of mindset will lead to like a very, very positive outcome and help keep alignment always.

Gen FurukawaYeah, absolutely.

Andrew MichaelSo the next thing I have a question for you is the you work as well now with quite a few different companies. What is some of the things that you're surprised by or you think not enough company actually pay attention to our look into so obviously retention one of them, but are they new things like specific in the area? They just care. Like I come into quite a few companies now. And I feel this like this this common gap that companies tend to leave either step or they don't focus on a specific area.

Gen Furukawathere are a couple that come into mind immediately. One is kind of like the data collection and the, I guess, like, you know, it gets very challenging into have, you know, a source of truth. And it's also a huge technical endeavor to have a data warehouse where everything is piped in and piped out very accurately and everybody's like, pulling from that because, you know, as we were talking about teams have different goals and initiatives going on. They also have their own marketing software's and so there's there's going to be some conflict in data sources. So I think that might come With maybe just a later stage and maturity and company, but i think that's that's a challenge is what data is out there. And of course, it's like Goldilocks, it could be way too much data, and then there's a lot of noise or it could just be not enough. And then there are some ways where either you have to make decisions based on a hunch, or based on a small sample size, and kind of like work from there. I think that that's kind of just the nature of business, though, there's always going to be a decision made with imperfect data, but that that's a challenge. So you know, from the outset, I think having you know, an event tracking sheet where you you outline you know, what it is, and then what it is in terms of user events that are being tracked. And that goes for you know, like what your email campaign your email service providers say like no drip or intercom as well as nurses to accurate campaign, as well as maybe like an intercom or whatever CRM is and, and make sure that there's kind of an alignment of the events and data that's being tracked between the two. Because ultimately, the goal is to create tight segments so that you're able to get the necessary information and messaging in front of the customer, based on what their activities or lack of activities are. And so that really comes down to what data you're gathering.

Andrew MichaelYeah, I can relate a lot to what you're saying now, as well as I think like, I'm actually I work at Hot jar and busy building the business intelligence team. And we are probably like, two, three years too late. And the sense that we only really starting to get started now with having a robust infrastructure and set up to be able to analyze and consume data. And we were in that scenario where there wasn't really much trust in the data. We were using different tools for different sources and we're seeing different numbers every so definitely is is a big challenge. I think. Well, on this that there's a time as well when it comes to having data and metrics. And it's also important maybe for like younger startups to think because this is something like, when I first joined her job, I was surprised that we didn't have a robust setup. But looking back now, in hindsight, like early days, when you don't really have enough data, you're just looking at noise. So you better serve by having really strong foots in the ground with qualitative data speaking to customers constantly, of which you should always do and you should never stop. But then it does come a point in time where you can't make decisions just with qualitative and you actually need to have the quantitative so I think we probably started a little bit late at hacia. But I think we did a good job in the beginning of really that just almost hundred percent purely relying on qualitative research really iterated on their product based on feedback, having some sort of quantitative element to it, obviously, like grouping and collecting those voices. But I think timing as well as another thing with the data,

Gen Furukawafor sure. I mean, there's there are solutions. Now. You know, like mix panels auto track or heap, where you can just kind of like dropping a snippet and then go back and say, Hey, like, what is this doing? And then you can kind of create events retro actively. And I think that's incredible. So that that's kind of like a good solution. But

Andrew MichaelAnd those are both excellent. So you don't really need to be forward thinking and thinking what you're looking for just you have sort of the safety net of having it available if you need.

Gen FurukawaYeah. However, that doesn't negate the importance of having a well thought out plan of what you're going to be tracking and why and how that informs, you know, whether it's the onboarding or the messaging or however you're carrying your customer through their customer lifecycle. I think it's still important, because too much data is just not necessarily helpful either.

Andrew MichaelYeah, I would say it's critical. And I think like you think about it, early stage, it's something that's often overlooked as well. It's okay, like we'll get to it. There's just so many other things that are more important, but starting Early will give you so much more advantages when you actually do get around to taking advantage of it and making use of data effectively.

Gen FurukawaYeah, cool.

Andrew MichaelSo again, we're running close now and time last question for you is, what is one piece of advice that you would give to any startup now who has issues with churn like thinking about how to go out sold me?

Gen FurukawaYeah, that's a good question. So I think the thing to think back is, that churn is ultimately a lagging indicator, and it's kind of indicative of a customer's likelihood of succeeding. So I think, if you're able to hone in on what your different customer personas are, and what the goals of those different customer personas are, and then take it from there in terms of the User Education and the content that you might have a product education and introducing them to the product, then I think you'll you'll Be able to kind of like, have incremental improvements on where on how many customers and how likely they are to, you know, air quotes succeed, you know, whatever their definition of success is, and whatever the goal is that they're trying to accomplish. So, yeah, I think that that might go to the very, very early stages of onboarding and then segmenting their so gathering that critical information of what their goals are, what their version of success is. And I think one one famous example is the founder of groove just sends an email like what is success look like for you and I have no idea of what they do on the back end, how they tag it or who enters it and how that customer is profiled from there. But I think that that's just really good way to like personalize the first experience with the product and then from there, the company can help them The customer that much more in terms of succeeding.

Andrew MichaelYeah, I think you've hit the nail on the head. It's like really if you're not delivering value, people are going to turn figuring out who are your key segments? And what are they after? What are they looking to use your product or service for? And how can you give them that value is key to ensuring that success and reducing churn. So again, it's been a pleasure having you on the show today. Really, really appreciate your time. Thanks for joining us.

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About

The show

My name is Andrew Michael and I started CHURN.FM, as I was tired of hearing stories about some magical silver bullet that solved churn for company X.

In this podcast, you will hear from founders and subscription economy pros working in product, marketing, customer success, support, and operations roles across different stages of company growth, who are taking a systematic approach to increase retention and engagement within their organizations.